WTO disapproval of China’s use of GATT to justify export controls of metals

An article in the New York Times (Jan 30, 2012) describes a decision by the World Trade Organization (WTO) against China’s use of export controls for zinc, bauxite etc t0 incent manufacturers to locate plants within China.  Use of GATT (General Agreements on Tariffs and Trade) to justify these export controls based on scarce resources or environmental reasons were rejected.  China was thus claimed by the WTO to use export controls to distort international trade.  Will rejection of these export controls increase the odds of a similar ruling for rare earth metals ? Should one expect an increased movement of manufacturing out of China or is the location decision only marginally affected by such restrictions ? Given the growing Chinese consumer demand, will the logic of manufacturing in China in a global supply chain be to sell to the Chinese market and not export it out ?

About aviyer2010

Professor
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